Smart529 Select

Features and Benefits


Tax Features

  • Earnings on your SMART529 Select account grow tax-deferred, leaving all of your money invested to accumulate for college. 
  • Distributions for qualified higher education expenses (tuition, fees, room, board, books, supplies and equipment) are federal income tax free. Non-qualified withdrawals are taxable as ordinary income to the extent of earnings and may also be subject to a 10% federal income tax penalty. Such withdrawals may have state income tax implications.
  • Anyone can contribute up to $14,000 per year ($28,000 for married couples filing jointly) to a to a beneficiary's SMART529 Select account without gift-tax consequences.1  Contributions may be accelerated up to $70,000 ($140,000 for married couples) once per 5-year period without incurring federal gift taxes.2

Account Owner Control

 
  • As the account owner you maintain complete control of your SMART529 Select account, including how contributions are invested and when withdrawals are made.
  • There is no set deadline for using your account assets. The proceeds can be withdrawn penalty free at any time, if used for qualified3 higher educational expenses.
  • You can change your beneficiary without a federal income tax liability, as long as the new beneficiary is a family member of the current beneficiary.4
 

Flexibility

  • Your SMART529 Select account can be used to cover qualified3 higher educational expenses at thousands of eligible institutions throughout the country, including colleges, universities, and vocational schools. 
  • An account can be opened in anyone's name, including your own. 
  • If the beneficiary receives a scholarship, you can withdraw an amount equal to the scholarship from your account without a federal income tax penalty.  The money must be used to pay for qualified education expenses or the earnings will be subject to ordinary income tax, but not the 10% federal income tax penalty. 

Simple, Convenient Contributions

  • It only takes $250 per fund to open a SMART529 Select account, and additional contributions can be as little as $25 per fund.  The annual maintenance fee is waived if you are enrolled in the Automatic Investment Program or Payroll Direct Deposit for $25 or more each month for at least twelve consecutive months, or at least $300 annually, and on account balances over $25,000.
  • Anyone can contribute to a SMART529 Select account, including friends and relatives.  It's easy to make a gift contribution to a SMART529 Select account.
  • Contribute as often as you like.  SMART529 Select's Automatic Investment Program makes contributing directly from a checking or savings account each month simple. Or, you can sign up for Payroll Direct Deposit if your employer supports this program.
  • There are no limits on contributions until your account balance reaches $265,620.

Investment Choices

  • SMART529 Select offers a wide range of professionally managed investment options ranging from conservative to aggressive.  
  • Investing is convenient with asset allocation models based on the beneficiary's age (Age-Based Portfolios), or based on your risk tolerance and the time before college starts (Static Portfolios). 
  • The Age-Based and Static Portfolios are automatically rebalanced back to their original allocations on a quarterly basis.
  • Account owners may make one investment strategy change per year.
  • Investment returns are not guaranteed, and you could lose money by investing in the Plan.

 

1 Any additional gifts to the same designated beneficiary in that period would be subject to federal gift tax.

2 Any additional gifts to the same beneficiary in that 5-year period would be subject to federal gift tax.  If the donor elects to treat the gift as being made over 5 years, and the donor dies prior to the end of that 5-year period, the portion of the gift allocable to the period after the donor's death will be included in the donor's estate. Estate tax treatment may differ by state. Please consult your tax advisor for more information.

3 Qualified expenses include tuition, fees, the cost of books, supplies and equipment required for enrollment.

4 The following family members of the existing Designated Beneficiary are considered “Eligible Family Members” and can be named as the replacement Designated Beneficiary: son, daughter, or descendant of either; stepson or stepdaughter; brother, sister, stepbrother or stepsister; stepfather or stepmother; father, mother or ancestor of either; son or daughter of a brother or sister; brother or sister of father or mother; son-in-law, daughter-in-law, father-in-law, mother-in-law, sister-in-law or brother-in-law; spouse or spouse of any family member listed above; or first cousin.


MUN 119871

Updated 12/08/2015